4 Impact Assessment and potential
savings
41. The Impact Assessment envisages total annual
savings of some £7.8m. The ED says that "it is not possible
to say that in every case the costs saved will result in a direct
and commensurate increase in dividends for all creditors."[14]
It adds: "It is not appropriate to ring-fence the savings
and make them the subject of a one-off dividend to the creditors
because there are rules for the payment of dividend which themselves
gives rise to such costs (such as advertising intention to pay
a dividend, admitting claims for dividend purposes) and payment
of dividends should be done on as few occasions as necessary."[15]
42. Notwithstanding that, in the debate on the Legislative
Reform (Insolvency) (Advertising Requirements) Order 2009 that
took place on the Floor of the House on 19 March 2009, the Chairman
of our Committee asked the Minister for Employment Relations and
Postal Affairs to clarify that he expected savings from that measure
to be passed on to creditors and not to be held by insolvency
practitioners, and the Minister indicated that he was content
with that representation of the situation.
43. We express our strong wish that that statement
be noted by the insolvency practitioner profession in the context
of the current proposals.
44. In its recent report on the Insolvency Service,
the Business and Enterprise Committee said:
It may be inevitable that insolvency practitioners'
remuneration is perceived as unduly high by many creditors. There
must, however, be sufficient opportunity and information to allow
creditors to ensure that fees are reduced where that perception
is justified. We therefore welcome the Insolvency Service's commitment
to monitor whether insolvency practitioners are complying with
the current practice statement governing the approval of their
fees. We urge the Insolvency Service to make its findings publicly
available. We also urge the government to respond to these findings
and to consider the case for strengthening control - possibly
through independent arbitration - of insolvency practitioners'
remuneration beyond the limited power to do so currently exercised
by creditors.[16]
45. We note the intention to provide for greater
challenge to remuneration through amendments to the Rules.[17]
However, in light of the Business and Enterprise Committee's findings,
we repeat our concern that savings should be passed on to creditors
and members and recommend that the effect of the draft Order be
reviewed from that perspective after a period of 24 months from
implementation.
14 Paragraph 33 Back
15
Paragraph 27 Back
16
Conclusion 5 and paragraph 29 Back
17
See Proposal E Back
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